What’s your thesis for the ZTest Electronics? For me it looks really interesting right now. The part with Trevor Treweeke is really nice but the business itself looks really good
Hi there, I think the potential for ZTest as a business is much higher than their current performance but will only add more stock if we start seeing it come through.
They could reduce expenses, for example reducing overhead as they seem to have 2 CEO type roles today.
They might be able to improve sales as well if management is improved.
Capital allocation is a third pain point to improve currently, as the company is sitting on a mountain of cash without taking action
If 2/3 of these things improve, this can be a 2x. Would rather catch that midway than risking taking a large position and having it sit idle.
So it's a small starter today and I hope to see progress while averaging up
Thanks a lot. I do see the reliance on gold prices as a negative, and I'm not the only one. When gold dropped in the second half of October, these miners dropped more, because investors found themselves too exposed. They stayed in the position for the high earnings yield and the warm feeling of returns, but they realized their own overexposure when things turned a bit sour.
I have sold Matsa gold through October and November, to reduce exposure and will cut back my gold positions to ~35-40% if I find the next Soilbuild or OKP Holdings. It's a high bar to measure other investments against though, because even if gold falls to $3000, both miners I hold still trade below 6x forward earnings. This is mainly because the run from $2100 to $3000, already put a lot of cash in their hands, to fund high ROA organic expansion plans, at high margins
Having said that, looking at gold today, I see many positives, and again I hate to have any opinion about gold, but I do see this:
- The sentiment imho is still bad. Everyone agrees gold has ran too far. I don't know anyone in my personal life who is considering gold as an investment.
- The technical picture look great. Strong rally with healthy pullbacks. Up in each of the past 4 months.
- The fundamental picture is amazing (not for the world, but for gold). Europe / USA / Canada have started running their money and their state as a developing economy would. This means (1) Constant monetary expansion (2) Fiscal exuberance (3) Destroying trust in the system, for example Canada blocking truckers bank accounts, the USA taking Russia off SWIFT, Europe implementing money control and planning to take Russian funds blocked in Euroclear (including funds of millions of Russian retail investors)
So clearly, having large exposure to miners brings undesired risks, but currently I'm happy holding a very big position
Looks like Serabi did x12 since 2023, though?
Hi Jay it's up ~5x from April 2024 when their 2023 AR was published. Since then gold has doubled and Serabi has increased production.
What’s your thesis for the ZTest Electronics? For me it looks really interesting right now. The part with Trevor Treweeke is really nice but the business itself looks really good
Hi there, I think the potential for ZTest as a business is much higher than their current performance but will only add more stock if we start seeing it come through.
They could reduce expenses, for example reducing overhead as they seem to have 2 CEO type roles today.
They might be able to improve sales as well if management is improved.
Capital allocation is a third pain point to improve currently, as the company is sitting on a mountain of cash without taking action
If 2/3 of these things improve, this can be a 2x. Would rather catch that midway than risking taking a large position and having it sit idle.
So it's a small starter today and I hope to see progress while averaging up
This is such an amazing response floe. Thank you
Thanks mate. 🙏
Great report and well explained. I have ramped up miners too. Soma gold and golconda are good as well. Added them for diversification
Thank you! I agree, Monument Mining also looks good although Im happy with the current positions
Great post! How do you view gold miners reliance on gold? Do you not fear the cycle nearing the end?
Thanks a lot. I do see the reliance on gold prices as a negative, and I'm not the only one. When gold dropped in the second half of October, these miners dropped more, because investors found themselves too exposed. They stayed in the position for the high earnings yield and the warm feeling of returns, but they realized their own overexposure when things turned a bit sour.
I have sold Matsa gold through October and November, to reduce exposure and will cut back my gold positions to ~35-40% if I find the next Soilbuild or OKP Holdings. It's a high bar to measure other investments against though, because even if gold falls to $3000, both miners I hold still trade below 6x forward earnings. This is mainly because the run from $2100 to $3000, already put a lot of cash in their hands, to fund high ROA organic expansion plans, at high margins
Having said that, looking at gold today, I see many positives, and again I hate to have any opinion about gold, but I do see this:
- The sentiment imho is still bad. Everyone agrees gold has ran too far. I don't know anyone in my personal life who is considering gold as an investment.
- The technical picture look great. Strong rally with healthy pullbacks. Up in each of the past 4 months.
- The fundamental picture is amazing (not for the world, but for gold). Europe / USA / Canada have started running their money and their state as a developing economy would. This means (1) Constant monetary expansion (2) Fiscal exuberance (3) Destroying trust in the system, for example Canada blocking truckers bank accounts, the USA taking Russia off SWIFT, Europe implementing money control and planning to take Russian funds blocked in Euroclear (including funds of millions of Russian retail investors)
So clearly, having large exposure to miners brings undesired risks, but currently I'm happy holding a very big position
Thank you for the elaborated response, I do agree they are very undervalued and seem like great value here.
Gold doesn’t seem to go away with gov printers working 24/7
I don’t hold any miner so I feel late but might check some out.